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Canadian auto sales exploded with an all-time record in April 2016—how?

Despite decreased car demand, Canadian auto sales hit an all-time record in April

Never before in the history of the Canadian auto industry had automobile manufacturers and their dealers combined to sell more than 200,000 new vehicles in a single month.

Yet in April 2016, consumers, businesses, fleets, government agencies, and perhaps even a few U.S. dollar-toting, cross-border-shopping Americans bought and leased more than 200,000 new vehicles.

By the historic standards of April alone, 2016’s fourth month was an astonishingly successful one for most manufacturers in Canada. Three-quarters of the auto brands competing in Canada sold more vehicles this April than last.

Post-recession, over the last four years, April was a month in which automakers averaged 175,000 sales. Yet April 2016 proved to be the seventh consecutive April in which Canadian auto sales increased, and last year’s April total was surpassed by more than 11,000 units.

Improvement in April 2016 was certainly not unexpected. Year-over-year, Canadian auto sales have increased in 36 of the last 37 months. In 2016, first-quarter volume jumped 9 percent, a highly successful follow-up to a year of record annual sales in 2015.

But to what do we credit the rapid rate of auto sales expansion in April 2016?

Low prices certainly work in the car buyer’s favour. Prices for the Canadian-built Dodge Grand Caravan – Canada’s dominant people-carrier and Canada’s third-best-selling vehicle overall in April – are more than 20 percent lower than prices for its two prime competitors.

Dodge is now offering interest-free financing over seven years to Grand Caravan buyers. Consequently, Grand Caravan sales climbed to an all-time monthly high of 6,368 units in April.

Canada’s best-selling vehicle line, the Ford F-Series, set an all-time record of 13,957 sales in April. Ford Canada currently lists a typical F-150 with a $3,750 delivery allowance and interest-free financing up to six years.

Canada’s best-selling car, the Canadian-built Honda Civic, has a lower base price in Canada than it does in the United States. If Honda Canada manages to continue the current rate of Civic sales growth through the final two-thirds of the year, 2016 will be the nameplate’s best year ever.

Despite the increased strength of the F-Series and its pickup truck cohorts, rebounding minivan sales, and growth from top-of-the-heap passenger cars, demand for SUVs and crossovers was the real reason for April’s sterling industry-wide achievement.

Compared with April 2015, SUV/crossover sales jumped 14 percent in April 2016, a gain of 10,000 units during a period in which Canada’s passenger car market lost more than 6,500 sales. Seven of Canada’s 10 top-selling utility vehicles in April posted gains above the market average. The leader of the pack, the Canadian-built Toyota RAV4, jumped 18 percent to an all-time monthly record of 4,982 units.

Four out of every ten new vehicles sold in Canada in April were SUVs/crossovers. Year-over-year, SUVs and crossovers grew their share of the market by three percentage points.

Demand for SUVs and crossovers shows no sign of abating. Traditionally, Canadians buy and lease more new vehicles in May than at any point on the calendar. Which puts April’s record-setting performance in danger of dismissal already.